What Does Shareholders' Equity Mean?
A firm's total assets minus its total liabilities; also expressed as shareholder capital plus retained earnings minus Treasury shares. Shareholders' equity shows how much a company is financed through common and preferred shares. Also known as share capital, net worth, and stockholders' equity. It is calculated as shown here:
Investopedia explains Shareholders' Equity
Shareholders' equity comes from two main sources. The first is the money that originally was invested in the company, along with any additional investments made thereafter. The second is the retained earnings that the company is able to accumulate over time through its operations. In most cases, retained earnings are the larger of the two figures.
Related Terms:
• Capital Structure
• Common Stock
• Equity
• Preferred Stock
• Retained Earnings
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